Small Business Innovation and Economic Security Act in plain language
Section 1: Short title
This section would let the Act be officially called the Small Business Innovation and Economic Security Act.
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1. Short title This Act may be cited as the Small Business Innovation and Economic Security Act .
Section 2: Bolstering research security of SBIR and STTR awards
This section would change how Federal agencies handle security-risk screening in the SBIR and STTR small business award programs, by amending section 9 of the Small Business Act (15 U.S.C. 638).
The bill would make the same set of changes twice: once to a set of program requirements in subsection (g) and once to a nearly identical set in subsection (o). In both places, it would add a requirement that agencies evaluate whether a small business concern presents a security risk for any reason, using measures that include the required due diligence process, disclosures the business submits, and coordination with the intelligence community (as defined in the National Security Act of 1947), Federal law enforcement, and other Federal counterintelligence capabilities.
The bill would also add new grounds, in both lists, for finding that a small business concern has a security risk (called a foreign risk in the subsection (o) version): the small business concern has a security risk connecting it to an entity, including any affiliates of that entity, or to an individual, that appears on any of eight specific government lists, namely the UFLPA Entity List maintained by the Department of Homeland Security, the Non-SDN Chinese Military-Industrial Complex Companies List maintained by the Treasury Department's Office of Foreign Assets Control, the Section 889 Prohibition List maintained by the Department of Defense, the list of Chinese military companies required under section 1260H of the National Defense Authorization Act for Fiscal Year 2021 and maintained by the Department of Defense, the Military End User List maintained by Commerce's Bureau of Industry and Security, the Entity List maintained by the same Bureau, the List of Equipment and Services maintained by the Federal Communications Commission, or the Withhold Release Orders and Findings List maintained by Customs and Border Protection; the security risk has a primary source that is classified; or the Federal agency determines the security risk otherwise warrants a denial. In the same lists, one existing criterion (a former subparagraph (B)) would be removed in each case; its text is not included in this amendment, so the specific rule being eliminated cannot be described here.
Whenever an agency denies an application based on a security-risk determination, or whenever an agency makes a security-risk determination about a small business concern even without denying an application, the bill would require the agency to give the small business concern a notification, at the agency's discretion and in a way that does not compromise national security, telling it that the determination was made and what the basis for it was. Agencies would also have to adopt a policy making clear that a denied application does not by itself bar the business from being eligible for an award in a later award cycle.
The bill would rewrite the list of things the required due diligence review (under subsection (vv)) must assess, replacing it with: a small business concern's cybersecurity practices; patent analysis; employee analysis; foreign ownership of the concern, including financial ties and obligations, which must include surety, equity, and debt obligations, that the concern or its employees have to a foreign country, foreign person, or foreign entity; foreign affiliations that a covered individual, owner, or other key personnel of the concern has with an entity in a foreign country of concern; investment relationships the concern has with an individual or entity in a foreign country of concern; technology licensing agreements or joint ventures with an individual or entity in a foreign country of concern; and business relationships between a covered individual, owner, or other key personnel of the concern and an individual or entity in a foreign country of concern. The due diligence review would also have to examine any relationship between the small business concern seeking an award and any entity or individual on the eight lists described above.
Finally, this section would change a 3-year period specified in the Government Accountability Office study required by section 4(b)(4) of the SBIR and STTR Extension Act of 2022 to 8 years.
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2. Bolstering research security of SBIR and STTR awards (a) In general Section 9 of the Small Business Act ( 15 U.S.C. 638 ) is amended— (1) in subsection (g)— (A) by redesignating paragraphs (15), (16), and (17) as paragraphs (16), (18), and (19), respectively; (B) by inserting after paragraph (14) the following: (15) evaluate whether a small business concern presents a security risk for any reason, through measures including— (A) the due diligence process required under subsection (vv); (B) disclosures submitted under this subsection; or (C) coordination with the intelligence community, as defined in section 3 of the National Security Act of 1947 ( 50 U.S.C. 3003 ), Federal law enforcement, and other counterintelligence capabilities of the Federal Government; ; (C) in paragraph (16), as so redesignated— (i) by striking subparagraph (B); (ii) by striking that— and all that follows through the small business concern submitting and inserting that the small business concern submitting ; (iii) by redesignating clauses (i), (ii), and (iii) as subparagraphs (A), (B), and (C), respectively, and adjusting the margins accordingly; (iv) in subparagraph (B), as so redesignated, by striking or at the end; (v) in subparagraph (C), as so redesignated, by striking and at the end; and (vi) by adding at the end the following: (D) has a security risk connecting the small business concern to an entity, including any affiliates of the entity, or individual on— (i) the UFLPA Entity List maintained by the Department of Homeland Security; (ii) the Non-SDN Chinese Military-Industrial Complex Companies List of the Office of Foreign Assets Control maintained by the Department of the Treasury; (iii) the Section 889 Prohibition List established under section 889 of the John S. McCain National Defense Authorization Act for Fiscal Year 2019 ( Public Law 115–232 ; 132 Stat. 1917) and maintained by the Department of Defense; (iv) the list of Chinese Military companies required under section 1260H of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 ( 10 U.S.C. 113 note) and maintained by the Department of Defense; (v) the Military End User List maintained by the Bureau of Industry and Security of the Department of Commerce; (vi) the Entity List maintained by the Bureau of Industry and Security of the Department of Commerce; (vii) the List of Equipment and Services maintained by the Federal Communications Commission; or (viii) the Withhold Release Orders and Findings List maintained by U.S. Customs and Border Protection; (E) has a security risk with a primary source that is classified; or (F) has a security risk that the Federal agency determines warrants a denial; ; (D) by inserting after paragraph (16), as so redesignated, the following: (17) provide for— (A) a process under which, upon making an award decision to deny an application on the basis of a determination under paragraph (16), or upon making a determination under paragraph (16) that a small business concern has a security risk described in that paragraph, the Federal agency provides to the small business concern, as appropriate pursuant to the discretion of the Federal agency and in a manner that does not compromise national security, a notification— (i) advising the small business concern of such determination; and (ii) identifying the basis for such determination; and (B) a policy that clarifies that receipt of an award decision denying an application does not prohibit the small business concern from being eligible for an award in a subsequent award cycle; ; (E) in paragraph (19), as so redesignated— (i) in subparagraph (B), by striking paragraph (16)(A) and inserting paragraph (18)(A) ; and (ii) in subparagraph (C), by striking paragraph (16)(B) and inserting paragraph (18)(B) ; (2) in subsection (o)— (A) by redesignating paragraphs (19), (20), and (21) as paragraphs (20), (22), and (23), respectively; (B) by inserting after paragraph (18) the following: (19) evaluate whether a small business concern presents a security risk for any reason, through measures including— (A) the due diligence process required under subsection (vv); (B) disclosures submitted under this subsection; or (C) coordination with the intelligence community, as defined in section 3 of the National Security Act of 1947 ( 50 U.S.C. 3003 ), Federal law enforcement, and other counterintelligence capabilities of the Federal Government; ; (C) in paragraph (20), as so redesignated— (i) by striking subparagraph (B); (ii) by striking that— and all that follows through the small business concern submitting and inserting that the small business concern submitting ; (iii) by redesignating clauses (i), (ii), and (iii) as subparagraphs (A), (B), and (C), respectively, and adjusting the margins accordingly; (iv) in subparagraph (B), as so redesignated, by striking or at the end; (v) in subparagraph (C), as so redesignated, by striking and at the end; and (vi) by adding at the end the following: (D) has a foreign risk connecting the small business concern to an entity, including any affiliates of the entity, or individual on— (i) the UFLPA Entity List maintained by the Department of Homeland Security; (ii) the Non-SDN Chinese Military-Industrial Complex Companies List of the Office of Foreign Assets Control maintained by the Department of the Treasury; (iii) the Section 889 Prohibition List established under section 889 of the John S. McCain National Defense Authorization Act for Fiscal Year 2019 ( Public Law 115–232 ; 132 Stat. 1917) and maintained by the Department of Defense; (iv) the list of Chinese Military companies required under section 1260H of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 ( 10 U.S.C. 113 note) and maintained by the Department of Defense; (v) the Military End User List maintained by the Bureau of Industry and Security of the Department of Commerce; (vi) the Entity List maintained by the Bureau of Industry and Security of the Department of Commerce; (vii) the List of Equipment and Services maintained by the Federal Communications Commission; or (viii) the Withhold Release Orders and Findings List maintained by U.S. Customs and Border Protection; (E) has a security risk with a primary source that is classified; or (F) has a security risk that the Federal agency determines warrants a denial; ; (D) by inserting after paragraph (20) the following: (21) provide for— (A) a process under which, upon making an award decision to deny an application on the basis of a determination under paragraph (20), or upon making a determination under paragraph (20) that a small business concern has a security risk described in that paragraph, the Federal agency provides to the small business concern, as appropriate pursuant to the discretion of the Federal agency and in a manner that does not compromise security, a notification— (i) advising the small business concern of such determination; and (ii) identifying the basis for such determination; and (B) a policy that clarifies that receipt of an award decision denying an application does not prohibit the small business concern from being eligible for an award in a subsequent award cycle; ; and (E) in paragraph (23), as so redesignated— (i) in subparagraph (B), by striking paragraph (20)(A) and inserting paragraph (22)(A) ; and (ii) in subparagraph (C), by striking paragraph (20)(B) and inserting paragraph (22)(B) ; and (3) in subsection (vv)(2)— (A) by amending subparagraph (A) to read as follows: (A) assess, using a risk-based approach as appropriate— (i) the cybersecurity practices of a small business concern; (ii) patent analysis; (iii) employee analysis; (iv) foreign ownership of a small business concern seeking an award, including the financial ties and obligations (which shall include surety, equity, and debt obligations) of the small business concern and employees of the small business concern to a foreign country, foreign person, or foreign entity; (v) foreign affiliations of a covered individual, owner, or other key personnel of a small business concern with an entity in a foreign country of concern; (vi) investment relationships of a small business concern with an individual or entity in a foreign country of concern; (vii) technology licensing agreements or joint ventures (including joint venture-like agreements) with an individual or entity in a foreign country of concern; and (viii) business relationships between a covered individual, owner, or other key personnel of a small business concern and an individual or entity in a foreign country of concern; ; (B) in subparagraph (B), by striking the period at the end and inserting ; and ; and (C) by adding at the end the following: (C) examine any relationship of a small business concern seeking an award to any entity or individual included on the lists described in subsections (g)(16)(D) and (o)(20)(D). . (b) GAO study Section 4(b)(4) of the SBIR and STTR Extension Act of 2022 ( Public Law 117–183 ; 136 Stat. 2183) is amended by striking 3 years and inserting 8 years .
Section 3: Phase II strategic breakthrough funding
This section would create a new funding path, called a strategic breakthrough allocation, within the SBIR program under section 9 of the Small Business Act.
For a Federal agency whose required SBIR spending under subsection (f)(1) is more than $100,000,000, the agency could set aside up to 0.50 percent of its extramural budget for research or research and development, for fiscal year 2026 and each year after, as a strategic breakthrough allocation. Awards made using this allocation would not be subject to an existing requirement in subsection (aa)(1) or the existing requirement to get an Administrator waiver under subsection (aa)(4), as long as the award is no more than $30,000,000.
Using this allocation, an agency could award a Phase II agreement of up to $30,000,000 to a small business concern, including its affiliates, in one award or a series of awards tied to production or development milestones, as long as the total period of performance for the project is no more than 48 months. To qualify, the small business concern would have to have already received at least one prior Phase II award under SBIR or STTR; show matching funds of at least 100 percent of the award, coming from new private capital raised because of the strategic breakthrough award, new funding from a government program other than Phase I or Phase II of SBIR or STTR that resulted from the strategic breakthrough award, or a combination of the two; and show, through market research, that its technology is an effective solution. To get a strategic breakthrough award from the Department of Defense specifically, the concern would also have to offer a product, process, or technology that meets a necessary readiness level and has a commitment for inclusion in a program objective memorandum from an official ranked program acquisition executive or higher; offer something that will meet high priority requirements or operational needs of a military department by transitioning into the acquisition process; and show that at least 20 percent of its required matching funds come specifically from new Department of Defense funding, outside Phase I or II, tied to the strategic breakthrough award.
The agency would have to complete any contract award using these funds within 90 days of receiving the small business concern's proposal. Eligible activities would be any critical technology area or requirement the agency considers necessary. In choosing who to fund, the agency would consider the concern's potential to advance United States national security capabilities, its potential to offer new technologies, processes, or applications that create alternatives to existing programs, whether a Federal agency customer has expressed intent to buy and use the technology, and whether the technology area is undercapitalized by private investment. Each agency would also have to set up streamlined proposal and application processes for these awards.
Separately, the section would expand the SBA's commercialization readiness program under subsection (y): the existing duty to identify certain research programs would explicitly cover programs backed by a strategic breakthrough allocation award, and the responsible office would gain two new duties: working with SBIR program managers of each component to make sure identified research programs are analyzed during the agency's budget planning process, and reporting to the Senate Committee on Small Business and Entrepreneurship and the House Committees on Small Business and on Science, Space, and Technology on how SBIR and STTR awardees are folded into research, development, testing, and evaluation budget rollouts. An existing paragraph of that subsection, paragraph (3), would be repealed outright; because its text is not included in this bill, the rule it contained cannot be described here. The subsection would also gain a duty to set up a way for small business concerns to get direct access to the program and requirements offices that might buy their technology under SBIR Phase III.
The head of each Federal agency eligible to use a strategic breakthrough allocation would have to brief the Senate Committee on Small Business and Entrepreneurship, the House Committee on Small Business, and the House Committee on Science, Space, and Technology within 60 days of enactment on whether it plans to make these awards and why. Any agency that decides to use this authority would have to keep briefing those committees on a recurring basis until it finishes setting up its award procedures.
This entire strategic breakthrough allocation authority, and the changes it makes, would end on September 30, 2031, at which point the law would revert to how it read before this section.
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3. Phase II strategic breakthrough funding (a) In general Section 9 of the Small Business Act ( 15 U.S.C. 638 ) is amended— (1) in subsection (aa), by adding at the end the following: (6) Strategic breakthrough allocation The requirement under paragraph (1) and the requirement to receive a waiver from the Administrator under paragraph (4) do not apply to a Federal agency for awards of not more than $30,000,000 to a small business concern with funds made available under a strategic breakthrough allocation (as defined in subsection (ff)(3)(A)). ; and (2) in subsection (ff), by adding at the end the following: (3) Strategic breakthrough awards (A) Strategic breakthrough allocation defined In this paragraph, the term strategic breakthrough allocation means, with respect to a Federal agency with a required expenditure under subsection (f)(1) in excess of $100,000,000, an expenditure amount from the SBIR allocation under subsection (f)(1) of such agency of not more than 0.50 percent of the extramural budget for research or research and development designated for such agency for fiscal year 2026 and every fiscal year thereafter. (B) Award Under this paragraph, a funding agreement may be awarded to a small business concern by a Federal agency using funds made available under a strategic breakthrough allocation. (C) Fund parameters In the case of a Phase II agreement that is awarded to a small business concern by a Federal agency using funds made available under a strategic breakthrough allocation, the following requirements shall apply: (i) Award size and period of performance A Federal agency may award from a strategic breakthrough allocation not more than $30,000,000 to a small business concern, including its affiliates, in a single award or series of awards based on reaching production or development milestones, if the total period of performance of the project with respect to which such funds are awarded is not more than 48 months. (ii) Small business concern requirements The small business concern shall— (I) have been awarded not less than 1 prior Phase II award under the SBIR or STTR program; (II) demonstrate not less than 100 percent matching funds from— (aa) new private capital as a result of an award using funds made available under a strategic breakthrough allocation; (bb) new funding awarded by a government agency under a program other than Phase I or II of the SBIR or STTR program as a result of an award using funds made available under a strategic breakthrough allocation; or (cc) a combination of funds described in items (aa) and (bb); (III) demonstrate a technology that is an effective solution, as determined by market research; and (IV) only be eligible for an award from the strategic breakthrough allocation at the Department of Defense if the small business concern— (aa) provides a product, process, or technology that meets a necessary level of readiness and has a commitment for inclusion in a program objective memorandum from an official with the rank of program acquisition executive or higher in an acquisition organization of the Department of Defense; (bb) provides a product, process, or technology that will meet high priority requirements or operational needs of a military department through a successful transition and into the acquisition process; and (cc) demonstrates not less than 20 percent of the required matching funds under subclause (II) come from new funding awarded by the Department of Defense under a program other than Phase I or II of the SBIR or STTR program as a result of an award using funds made available under a strategic breakthrough allocation. (iii) Deadline The Federal agency shall complete any contract awards using strategic breakthrough allocation funds not later than 90 days after receiving a proposal from a small business concern for the award. (iv) Eligible activities Eligible activities by a small business concern using strategic breakthrough allocation funds are any critical technology areas or requirements deemed necessary by the Federal agency. (v) Selection criteria In making awards using funds made available under a strategic breakthrough allocation, the Federal agency shall consider— (I) the potential of the small business concern to advance the national security capabilities of the United States; (II) the potential of the small business concern to provide new technologies or processes, or new applications of existing technologies, that will enable new alternatives to existing programs; (III) whether a customer in a Federal agency has expressed an intent to purchase and integrate technology from the small business concern into its operations; or (IV) whether a particular technology area is undercapitalized by private investment. (D) Use of streamlined contracting mechanisms Each Federal agency shall implement streamlined processes and requirements for submitting proposals and applying for awards using funds made available under a strategic breakthrough allocation. . (b) Commercialization readiness program Section 9(y) of the Small Business Act ( 15 U.S.C. 638(y) ) is amended— (1) in paragraph (2)— (A) by striking shall identify and inserting shall— (A) identify ; (B) in subparagraph (A), as so designated— (i) by inserting , including small business concerns with an award from the strategic breakthrough allocation (as defined in subsection (ff)(3)(A), before that have the potential ; and (ii) by striking the period at the end and inserting a semicolon; and (C) by adding at the end the following: (B) ensure, in collaboration with SBIR program managers of each component, that research programs identified under subparagraph (A) are analyzed within the programming and budgeting process as budget requests are developed; and (C) provide to the Committee on Small Business and Entrepreneurship of the Senate and the Committees on Small Business and Science, Space, and Technology of the House of Representatives information on the integration of SBIR and STTR awardees in budget rollouts for research, development, testing, and evaluation activities. ; (2) by striking paragraph (3); (3) by redesignating paragraphs (4), (5), and (6) as paragraphs (3), (4), and (5), respectively; and (4) in paragraph (5), as so redesignated— (A) in subparagraph (B), by striking and at the end; (B) by redesignating subparagraph (C) as subparagraph (D); and (C) by inserting after subparagraph (B) the following: (C) establish a mechanism to provide small business concerns with direct access to program and requirements offices that may purchase technology from the small business concern under Phase III of the SBIR program; and . (c) Briefings (1) Definition In this subsection, the term appropriate committees of Congress means— (A) the Committee on Small Business and Entrepreneurship of the Senate; (B) the Committee on Small Business of the House of Representatives; and (C) the Committee on Science, Space, and Technology of the House of Representatives. (2) General requirement Not later than 60 days after the date of enactment of this Act, the head of each Federal agency that is eligible to make an award from funds made available under a strategic breakthrough allocation (as defined in paragraph (3) of subsection (ff) of section 9 of the Small Business Act ( 15 U.S.C. 638 ), as added by this section) shall brief the appropriate committees of Congress on whether that Federal agency plans to make awards pursuant to the authority provided under such paragraph (3), including the reasons why the Federal agency plans to, or does not plan to, use that authority. (3) Recurring briefing by Federal agencies using funding authority The head of each Federal agency that opts to make awards pursuant to the authority under paragraph (3) of subsection (ff) of section 9 of the Small Business Act ( 15 U.S.C. 638 ), as added by this section, shall, on a recurring basis until the Federal agency finalizes procedures for making those awards, brief the appropriate committees of Congress regarding the implementation of such paragraph (3) by that Federal agency. (d) Termination Effective on September 30, 2031— (1) this section and the amendments made by this section shall cease to have effect; and (2) the provisions of law amended by this section shall be restored as if such amendments had not been enacted.
Section 4: Reducing administrative burden
This section would add a new subsection (aaa) to section 9 of the Small Business Act. Starting in fiscal year 2027 and every fiscal year after, the Director of each Federal agency's SBIR or STTR program office, using authority that cannot be delegated, would have to set a single limit, applied equally to all small business concerns, on the maximum number of proposals a concern may submit to that agency's Phase I and Phase II solicitations in a fiscal year. The Director would have to set that limit on one of three bases: per fiscal year, per solicitation, or per topic.
On a topic by topic basis, the Director could waive the proposal limit for a specific topic at the time the solicitation is announced, if the topic is time sensitive and urgent to the agency's mission. To get a waiver, the Director would have to send the SBA Administrator and the agency's Undersecretary overseeing the SBIR or STTR program a written justification explaining why the waiver is imperative to the mission and why the urgent need cannot be met by concerns that have not reached the proposal limit. The Undersecretary and the Administrator would have 15 days after receiving the waiver request and justification to approve or disapprove it, and neither decision could be delegated. Once a waiver is granted for a topic, the proposal limit would not stop any small business concern from submitting a proposal on that topic. Agencies would have to keep records of which topics received waivers and why, and could not waive the limit for more than 5 percent of an agency's SBIR and STTR topics in a fiscal year.
Within 30 days of setting or changing a proposal limit, the agency head would have to tell the Senate Committee on Small Business and Entrepreneurship, the House Committee on Small Business, and the House Committee on Science, Space, and Technology the methodology used, the considerations behind it, and how many small business concerns are affected based on historical data. Within 30 days of granting a waiver, the Director would have to send those same committees written notice of the waiver, including the topic and justification information described above. The Director would have to set each fiscal year's proposal limit at least 90 days before that fiscal year starts, for fiscal year 2027 and every year after.
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4. Reducing administrative burden Section 9 of the Small Business Act ( 15 U.S.C. 638 ) is amended by adding at the end the following: (aaa) Reducing administrative burden (1) In general With respect to fiscal year 2027 and each fiscal year thereafter, the Director of the SBIR or STTR program office of each Federal agency shall, pursuant to authority that may not be delegated, set equally for all small business concerns a limit on the maximum number of proposals that a small business concern may submit in response to Phase I solicitations and Phase II solicitations under subsection (cc), published by that Federal agency, including all components of that Federal agency, in a single fiscal year. In establishing such a limitation, the Director of the SBIR or STTR program office of each Federal agency shall use 1 of the following methods: (A) A limit for any small business concern on a fiscal year basis. (B) A limit for any small business concern on a solicitation basis. (C) A limit for any small business concern on a topic basis. (2) Waiver (A) In general On a topic by topic basis, the Director of the SBIR or STTR program office of each Federal agency may grant a waiver of the proposal limit under paragraph (1) at the time of a solicitation announcement for a specific topic for the SBIR or STTR program of the Federal agency if the topic is time-sensitive and urgent to the mission of the Federal agency. (B) Written justification For each topic for which a waiver is sought under subparagraph (A), the Director of the SBIR or STTR program office of the Federal agency shall provide a written justification to the Administrator, and to the Undersecretary described in subparagraph (C), for why the use of the waiver authority is imperative for the agency’s mission and the nature of the immediate and critical need that the Director reasonably believes cannot be met by small business concerns that have not reached the proposal limit under paragraph (1). (C) Timing The Undersecretary overseeing the SBIR or STTR program at a Federal agency and the Administrator are required to approve or disapprove a waiver and written justification not later than 15 days after the date on which the Undersecretary receives from the Director the waiver request described in subparagraph (A) and the written justification described in subparagraph (B). (D) Nondelegation The authority to grant or approve a waiver under subparagraph (A) or (C), respectively, may not be delegated. (E) Waiver effects If the Federal agency grants a waiver under subparagraph (A) with respect to a topic for the SBIR or STTR program of a Federal agency, paragraph (1) shall not prohibit any small business concern from submitting an SBIR or STTR proposal to that Federal agency under such topic. (F) Record requirement Participating agencies shall maintain information on topics to which waivers of the proposal limit under this paragraph are granted, including the written justifications for those waivers. (G) Limitation A Federal agency may not grant a waiver under this paragraph with respect to more than 5 percent of the topics of the SBIR and STTR programs of the Federal agency in any fiscal year. (3) Reporting (A) In general Not later than 30 days after the date on which the Director of the SBIR or STTR program office of a Federal agency sets or changes a limit under paragraph (1), the head of that Federal agency shall provide to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business and the Committee on Science, Space, and Technology of the House of Representatives the methodology for setting or changing that limit, the considerations made in setting or changing that limit, and how many small business concerns are impacted by that limit based on historical data. (B) Written notification Not later than 30 days after the date on which the Director of the SBIR or STTR program office of a Federal agency grants a waiver under paragraph (2), the Director shall provide to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business and the Committee on Science, Space, and Technology of the House of Representatives a written notification regarding the granting of that waiver, which shall include the information described in paragraph (2)(F) with respect to that waiver. (4) Timing The Director shall establish the proposal limit under paragraph (1) not later than 90 days before the start of fiscal year 2027 and each fiscal year thereafter. .
Section 5: Phase III award education
This section would amend section 9 of the Small Business Act. It would add a definition of agency acquisition workforce, meaning a Federal agency's employees with procurement or acquisition responsibilities, including employees described in section 1703 of title 41 of the United States Code and individuals who are part of the acquisition workforce as defined in section 101(a) of title 10.
It would require the SBA Administrator, working with the Secretary of Defense, the Administrator of General Services, and the head of any other Federal agency the Administrator considers appropriate, to set up training for contracting officers and the agency acquisition workforce so they understand Phase III awards under the SBIR and STTR programs. That training would have to cover the missions, goals, and authorities of the SBIR and STTR programs, how Phase III agreements are used, Phase III data rights, and how Phase III sole source award contracts are carried out. The training could be paid for with funds already available under subsections (y) and (mm) of section 9.
It would also add contracting officer and acquisition workforce training under this new authority to the list of activities that can be funded under subsection (mm)(1).
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5. Phase III award education Section 9 of the Small Business Act ( 15 U.S.C. 638 ) is amended— (1) in subsection (e)— (A) in paragraph (18), by striking and at the end; (B) in paragraph (19), by striking the period at the end and inserting ; and ; and (C) by adding at the end the following: (20) the term agency acquisition workforce means the employees of a Federal agency that have procurement or acquisition responsibilities, including— (A) employees described in section 1703 of title 41, United States Code; and (B) individuals that are part of the acquisition workforce, as defined in section 101(a) of title 10, United States Code. ; (2) in subsection (r), by adding at the end the following: (5) Workforce training (A) In general The Administrator, in coordination with the Secretary of Defense, the Administrator of General Services, and the head of any other Federal agency that the Administrator determines appropriate, shall establish training activities for contracting officers and the agency acquisition workforce of Federal agencies to ensure that all such individuals are fully aware of all aspects of Phase III awards under the SBIR and STTR programs, as applicable. (B) Training topics The training activities required under subparagraph (A) shall include training on— (i) the missions, goals, and authorities of the SBIR and STTR programs; (ii) the use of Phase III agreements; (iii) Phase III data rights; and (iv) the execution of Phase III sole source award contracts. (C) Funding The training activities required under subparagraph (A) may be carried out using funds made available to carry out subsections (y) and (mm). ; and (3) in subsection (mm)(1)— (A) in subparagraph (J), by striking and at the end; (B) in subparagraph (K), by striking the period at the end and inserting ; and ; and (C) by adding at the end the following: (L) contracting officer and acquisition workforce training activities pursuant to subsection (r)(5). .
Section 6: Phase III improvements
This section would amend section 9 of the Small Business Act. First, it would add a duty for procurement center representatives under subsection (j)(4): they would now also have to advocate for the maximum practicable use and transition of products, services, and technologies developed under SBIR or STTR into Phase III, through Phase III awards to small business concerns. Within 1 year of enactment, the SBA Administrator would have to update the related policy directives to match this new duty.
Second, it would add two new requirements, under subsection (r)(4), to the existing list of Phase III award simplification measures: developing simplified, standardized procedures and model contracts for Phase I, Phase II, and Phase III SBIR awards and reporting to the Administrator on what has been done to support that goal; and, where applicable, issuing standardized solicitation provisions and contract clauses that clearly explain what information small business concerns can be expected to provide, whether as part of market research or as part of a proposal, to establish their eligibility for a Phase III award.
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6. Phase III improvements (a) Procurement center representative directives (1) In general Section 9(j)(4) of the Small Business Act ( 15 U.S.C. 638(j)(4) ) is amended by inserting before the period at the end the following: , and advocate for the maximum practicable use and transition of products, services, and technologies developed under SBIR or STTR programs to Phase III by means of Phase III awards to small business concerns . (2) Modification deadline Not later than 1 year after the date of enactment of this Act, the Administrator of the Small Business Administration shall modify the policy directives issued pursuant to subsection (j) of section 9 of the Small Business Act ( 15 U.S.C. 638(j) ) in accordance with paragraph (4) of that subsection, as amended by paragraph (1). (b) Phase III award simplification Section 9(r)(4) of the Small Business Act ( 15 U.S.C. 638(r)(4) ) is amended— (1) in subparagraph (A), by striking and at the end; (2) in subparagraph (B), by striking the period at the end and inserting a semicolon; and (3) by adding at the end the following: (C) develop simplified and standardized procedures and model contracts for Phase I, Phase II, and Phase III SBIR awards and report to the Administrator on actions taken by the Federal agency in support of these objectives; and (D) as applicable, issue standardized solicitation provisions and contract clauses that provide clear guidance on the information that small business concerns participating in SBIR or STTR programs can be expected to provide as part of market research or as part of a proposal by those small business concerns to establish eligibility for Phase III awards. .
Section 7: Technical and business assistance improvements
This section would amend section 9(q) of the Small Business Act, which governs technical and business assistance for SBIR and STTR award recipients.
It would replace the existing rule letting a Federal agency enter into an agreement with vendors to provide small business concerns with technical and business assistance, with a new rule requiring the agency to let recipients of SBIR or STTR awards choose, if they want, technical and business assistance provided either through a selected vendor or through the new staff based option described below. It would add cybersecurity assistance to the list of assistance topics already named alongside intellectual property protections, and add a new goal for the assistance: screening for potential foreign involvement in a recipient's technology development or commercialization activities.
The part of the subsection that used to be about vendor selection would be retitled eligible uses of funds. Its old vendor selection criteria, formerly subparagraph (A), would be removed; the text is not shown in this amendment, so what it required cannot be described here. A new option would be added: a small business concern could, by contract or otherwise, use its assistance funding to hire new staff, add to existing staff, or direct staff to conduct or take part in training activities consistent with the assistance goals, instead of or alongside using a vendor.
The dollar caps on this assistance funding per project would be replaced. For a Phase I SBIR or STTR award, the agency would have to authorize the recipient to use up to $6,500 per project, whether included in the award or added on top of it as the agency head decides, spent either through a selected vendor or the staff option. For a Phase II award, the cap would be up to $50,000 per project on the same terms.
Agencies would also get new authority to perform targeted reviews of this technical and business assistance funding, as described in subsection (mm)(1)(F); that subsection's text is not included in this bill, so what it requires cannot be described here.
Finally, this section would add a new subsection (bbb) on participation in the Innovation Corps, known as I-Corps. Each Federal agency that runs an SBIR or STTR program and also has an I-Corps program would have to let award recipients request to take an I-Corps teams course, an I-Corps bootcamp, or an equivalent training program, and would have to let those recipients use their subsection (q) assistance funds to pay for it. The cost of that participation could come from an I-Corps team SBIR or STTR grant, funds awarded under subsection (q), funds available under subsection (mm), the participating teams or other appropriate sources, or any combination of those.
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7. Technical and business assistance improvements Section 9 of the Small Business Act ( 15 U.S.C. 638(q) ), as amended by this Act, is amended— (1) in subsection (q)— (A) in paragraph (1)— (i) in the matter preceding subparagraph (A)— (I) by striking may enter into an agreement with 1 or more vendors selected under paragraph (2)(A) to provide small business concerns engaged in SBIR or STTR projects with technical and business assistance services and inserting shall authorize recipients of awards under the SBIR program or the STTR program to select, if desired, technical and business assistance provided under subparagraph (A) or (B) of paragraph (2) with respect to SBIR or STTR projects ; (II) by inserting cybersecurity assistance, after intellectual property protections, ; and (III) by striking such concerns and inserting such recipients ; (ii) in subparagraph (C), by striking and at the end; (iii) in subparagraph (D), by striking the period at the end and inserting ; and ; and (iv) by adding at the end the following: (E) screening for potential foreign involvement in technology development or commercialization activities. ; and (B) in paragraph (2)— (i) in the paragraph heading, by striking Vendor selection and inserting Eligible uses of funds .— ; (ii) by striking subparagraph (A); (iii) by redesignating subparagraph (B) as subparagraph (A); and (iv) by inserting after subparagraph (A), as so redesignated, the following: (B) Staff A small business concern may, by contract or otherwise, use funding provided under this section to hire new staff, augment staff, or direct staff to conduct or participate in training activities consistent with the goals listed in paragraph (1). ; (C) in paragraph (3)— (i) by striking subparagraphs (A) and (B) and inserting the following: (A) Phase I A Federal agency described in paragraph (1) shall authorize a recipient of a Phase I SBIR or STTR award to use not more than $6,500 per project, included as part of the award of the recipient or in addition to the amount of the award of the recipient as determined appropriate by the head of the Federal agency, for the services described in paragraph (1)— (i) provided through a vendor selected by the small business concern under paragraph (2)(A); or (ii) achieved through the activities described in paragraph (2)(B). (B) Phase II A Federal agency described in paragraph (1) shall authorize a recipient of a Phase II SBIR or STTR award to utilize not more than $50,000 per project, included as part of the award of the recipient or in addition to the amount of the award of the recipient as determined appropriate by the head of the Federal agency, for the services described in paragraph (1)— (i) provided through a vendor selected by the small business concern under paragraph (2)(A); or (ii) achieved through the activities described in paragraph (2)(B). ; and (D) by adding at the end the following: (5) Targeted review A Federal agency may perform targeted reviews of technical and business assistance funding as described in subsection (mm)(1)(F). ; and (2) by adding at the end the following: (bbb) I–corps participation (1) In general Each Federal agency with an Innovation Corps program (commonly known as I–Corps ) that is required to conduct an SBIR or STTR program shall— (A) provide an option for requesting participation in an I–Corps teams course, I–Corps bootcamp, or another equivalent training program to recipients of an award under the SBIR or STTR program; and (B) authorize the recipients described in subparagraph (A) to use amounts authorized under subsection (q) to participate in the I–Corps teams course, I–Corps bootcamp, or another equivalent training program. (2) Cost of participation The cost of participation by a recipient described in paragraph (1)(A) in an I–Corps course, I–Corps bootcamp, or another equivalent training program may be provided by— (A) an I–Corps team SBIR or STTR grant; (B) funds awarded to the recipient under subsection (q); (C) funds made available to carry out subsection (mm); (D) the participating teams or other sources as appropriate; or (E) any combination of sources described in subparagraphs (A), (B), (C), and (D). .
Section 8: Improving SBIR and STTR data collection
This section would require more detailed data collection on SBIR and STTR awards.
It would amend section 9(k)(1) of the Small Business Act to add a new required data field for the SBIR database: for every award granted, whether it is classified or designated as a direct to Phase II award under subsection (cc), a subsequent Phase II award under subsection (bb)(1), a strategic breakthrough award under the new subsection (ff)(3), a Phase III prime contract award, or a Phase III subcontract award.
It would also require the Administrator of General Services to update the Federal Procurement Data System, or any successor system, to require reporting on whether an SBIR or STTR award carries the same five classifications listed above, require reporting on whether a contract is designated as a Phase III contract, require reporting on whether non-SBIR contracts and subcontracts are using SBIR or STTR funded technology, and require a contracting officer, when recording a Phase II or Phase III contract that follows earlier Phase I or Phase II work by a small business concern, to reference the SBIR or STTR contract identification number for that earlier work.
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8. Improving SBIR and STTR data collection (a) Additional data fields in SBIR database Section 9(k)(1) of the Small Business Act ( 15 U.S.C. 638(k)(1) ) is amended— (1) in subparagraph (E)(iv), by striking and at the end; (2) in subparagraph (F)(v), by striking the period at the end and inserting ; and ; and (3) by adding at the end the following: (G) for each award granted, whether the award is classified or designated as— (i) direct to Phase II, under subsection (cc); (ii) subsequent Phase II, under subsection (bb)(1); (iii) a strategic breakthrough award under subsection (ff)(3); (iv) a Phase III prime contract award; or (v) a Phase III subcontract award. . (b) Improving Federal Procurement Data Systems data tracking (1) Definitions In this section: (A) Federal agency; Phase II; Phase III; SBIR; STTR The terms Federal agency , Phase II , Phase III , SBIR , and STTR have the meanings given those terms in section 9(e) of the Small Business Act ( 15 U.S.C. 638(e) ). (B) Small business concern The term small business concern has the meaning given the term in section 3 of the Small Business Act ( 15 U.S.C. 632 ). (2) Requirement to update The Administrator of General Services shall update the Federal Procurement Data System described in section 1122(a)(4) of title 41, United States Code, or any successor system, to— (A) require reporting on whether an award under the SBIR or STTR program under section 9 of the Small Business Act ( 15 U.S.C. 638 ) is classified or designated as— (i) direct to Phase II, under subsection (cc) of such section; (ii) subsequent Phase II, under subsection (bb)(1) of such section; (iii) a strategic breakthrough award under subsection (ff)(3) of such section, as added by this Act; (iv) a Phase III prime contract award; or (v) a Phase III subcontract award; (B) require reporting on whether a contract is designated as a Phase III contract; (C) require reporting on whether non-SBIR contracts and subcontracts are using SBIR- or STTR-funded technology; and (D) require a government contracting officer, when recording a Phase II or Phase III contract following on from work done by a small business concern during a Phase I or Phase II award, to reference an SBIR or STTR contract identification number for relevant prior SBIR or STTR work done.
Section 9: Extending SBIR and STTR authorization
This section would extend the SBIR and STTR programs. It would change the expiration date in subsection (m) of section 9 of the Small Business Act from September 30, 2025 to September 30, 2031, and change the year referenced in subsection (n)(1)(A) from 2025 to 2031.
It would also let a Federal agency that has money left over at the end of fiscal year 2026, from the amounts it was required to spend on SBIR or STTR under subsection (f)(1) or (n)(1), use that leftover money in fiscal year 2027 for the same program.
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9. Extending SBIR and STTR authorization (a) In general Section 9 of the Small Business Act ( 15 U.S.C. 638 ), as amended by this Act, is amended— (1) in subsection (m), by striking September 30, 2025 and inserting September 30, 2031 ; and (2) in subsection (n)(1)(A), by striking 2025 and inserting 2031 . (b) Carry over funds If a Federal agency that participates in the SBIR or STTR program has funds remaining at the end of fiscal year 2026 from amounts required to be expended under subsection (f)(1) or (n)(1), respectively, of section 9 of the Small Business Act ( 15 U.S.C. 638 ), the Federal agency may use those remaining funds in fiscal year 2027 for the SBIR or STTR program, as applicable, of the Federal agency.
Section 10: Extension of SBIR and STTR programs and activities
This section would extend several SBIR and STTR related pilot programs and authorities through 2031, and make one related repeal.
For the direct to Phase II authority in subsection (cc) of section 9 of the Small Business Act, it would change the applicable period from fiscal years 2012 through 2025 to an open ended period running until September 30, 2031, add the Department of Energy and the National Aeronautics and Space Administration to the list of agencies covered, alongside the Department of Education which the subsection already named, and extend the authority, which previously applied only to the SBIR program, so that it also applies to the STTR program everywhere the subsection mentions SBIR.
It would extend, from 2025 to 2031, the end dates of the commercialization readiness program pilot for civilian agencies under subsection (gg)(7); the accelerated awards authority under subsection (hh)(2)(C); the Phase 0 pilot program under subsection (jj)(7); the administrative assistance authority under subsection (mm)(1); the increased minimum performance standards provision under subsection (qq)(3)(I); the commercialization assistance pilot programs under subsection (uu)(3); the due diligence program under subsection (vv)(3)(C); the pilot program for STTR participation by military research and educational institutions under subsection (yy)(2); the budget calculation pilot program under subsection (zz)(3); and a related Special Operations Command pilot program created by the National Defense Authorization Act for Fiscal Year 2020.
Finally, it would repeal section 5142 of the National Defense Authorization Act for Fiscal Year 2012, codified at 15 U.S.C. 638a, outright. The text of that section is not included in this bill, so the specific requirement being eliminated cannot be described here; this bill's own heading for the change identifies it as ending a Government Accountability Office mandate.
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10. Extension of SBIR and STTR programs and activities (a) Phase flexibility Section 9(cc) of the Small Business Act ( 15 U.S.C. 638(cc) ) is amended— (1) by striking During fiscal years 2012 through 2025 and inserting Until September 30, 2031 ; (2) by striking , and the Department of Education and inserting the Department of Energy, the National Aeronautics and Space Administration, and the Department of Education ; and (3) by inserting or STTR program after SBIR program each place that term appears. (b) Commercialization readiness program for civilian agencies pilot program Section 9(gg)(7) of the Small Business Act ( 15 U.S.C. 638(gg)(7) ) is amended by striking 2025 and inserting 2031 . (c) Accelerated awards Section 9(hh)(2)(C) of the Small Business Act ( 15 U.S.C. 638(hh)(2)(C) ) is amended by striking September 30, 2025 and inserting September 30, 2031 . (d) Phase 0 pilot program Section 9(jj)(7) of the Small Business Act ( 15 U.S.C. 638(jj)(7) ) is amended by striking 2025 and inserting 2031 . (e) Administrative assistance Section 9(mm)(1) of the Small Business Act ( 15 U.S.C. 638(mm)(1) ) is amended by striking September 30, 2025 and inserting September 30, 2031 . (f) Increased minimum performance standards Section 9(qq)(3)(I) of the Small Business Act ( 15 U.S.C. 638(qq)(3)(I) ) is amended by striking September 30, 2025 and inserting September 30, 2031 . (g) Commercialization assistance pilot programs Section 9(uu)(3) of the Small Business Act ( 15 U.S.C. 638(uu)(3) ) is amended by striking September 30, 2025 and inserting September 30, 2031 . (h) Due diligence program Section 9(vv)(3)(C) of the Small Business Act ( 15 U.S.C. 638(vv)(3)(C) ) is amended by striking September 30, 2025 and inserting September 30, 2031 . (i) STTR participation of military research and educational institutions pilot program Section 9(yy)(2) of the Small Business Act ( 15 U.S.C. 638(yy)(2) ) is amended by striking September 30, 2025 and inserting September 30, 2031 . (j) Budget calculation pilot program Section 9(zz)(3) of the Small Business Act ( 15 U.S.C. 638(zz)(3) ) is amended by striking September 30, 2025 and inserting September 30, 2031 . (k) Special Operations Command pilot Section 851(e) of the National Defense Authorization Act for Fiscal Year 2020 ( 10 U.S.C. 4901 note) is amended by striking September 30, 2025 and inserting September 30, 2031 . (l) Government Accountability Office mandate sunset The National Defense Authorization Act for Fiscal Year 2012 ( Public Law 112–81 ) is amended by striking section 5142 ( 15 U.S.C. 638a ). Passed the Senate March 3, 2026. Secretary